Recruitment problems have put Welsh universities and higher education colleges under a new funding squeeze for the coming year.
Teaching allocations for 2001-02 from the Higher Education Funding Council for Wales, released this week, amount to more cuts and little growth in the sector.
Taking student numbers into account, institutions overall will have to endure a second year of 0.5 per cent efficiency gains in their recurrent funding.
Three - the University of Wales, Swansea, University of Wales, Lampeter, and Trinity College, Carmarthen - have had to be "safety-netted" by the funding council to prevent their cuts from exceeding the maximum 3 per cent for a single year.
The cuts are the result of three factors. Possibly the most worrying one is recruitment difficulties, which institutions have warned are likely to continue unless the Welsh Assembly brings its funding (currently at £264,970,662) in line with English universities, which have been set higher growth targets.
Second, many Welsh institutions are having to take cuts as part of an "equalisation" programme to even out imbalances between institutions in the levels of funding per student - a process that is being carried out quicker than its English equivalent.
Finally, the funding council has been forced to make "conservative" allocations for next year as it awaits the outcome of the assembly's higher education review, which is expected to bring an announcement of more cash for 2002-03 and 2003-04.
Phil Gummett, head of the Hefcw, said the funding council had been faced with the complex task of making a "conservatively drawn settlement" for the coming academic year that smoothed over a sharp drop in projected investment from the assembly, which was planned in financial years 2001-02 and 2002-03.
He said: "It amounts to a significant reduction, driven mainly by recruitment problems. We have said that the system needs to be funded at the same level as England and that, in structural terms, the status quo is not an option."
Sir Adrian Webb, vice-chancellor of the University of Glamorgan and chair of Higher Education Wales, which represents Welsh vice-chancellors and principals, said an early announcement of new funding plans was needed from the assembly to clear up financial uncertainty in the sector.
Sir Adrian said: "Higher Education Wales was very pleased that the assembly had committed to an 8.1 per cent increase for the first year of the three-year funding cycle. We were therefore particularly shocked when the funding council announced an increase of only 0.65 per cent (in cash terms).
"With inflation in higher education running at over 4 per cent, this settlement would clearly be a major blow if it were the whole story. However, we understand that since there has been no announcement about the second and third year of the cycle, the funding council has in effect smoothed the first year's growth to reflect the lack of a clear future commitment. We are calling on the assembly to clarify the position as soon as possible."
Higher education minister Jane Davidson said that taking capital grant and tuition fees into account, this year's increase amounted to 5 per cent growth.
She said the projected funding figures the Hefcw was using to make its allocations were only provisional.
Tables: funding allocations 2001-2002.